It's outrageous

Richest 1% to own more than rest of world, Oxfam says.

It was quite some headline.  It seemed so unfair.  The top 1% owning all that.  The charity's research  shows that the share of the world's wealth owned by the richest 1% increased from 44% in 2009 to 48% last year.  On current trends, Oxfam says it expects the wealthiest 1% to own more than 50% of the world's wealth by 2016.  And it was neatly timed to coincide with the start of the World Economic Forum in Davos.  The implications were obvious.  

But, wait a minute.  The BBC's head of statistics, Anthony Reuben, said in order to be part of the wealthiest 1% of the world's population, an individual would need to be worth just over half a million pounds.  Yes, everyone with wealth of £530,000 or more.  That includes many people in rich countries who may not regard themselves as particularly wealthy, but who simply own their house outright or have paid off a significant chunk off their mortgage.  In fact it accounts for 2.9m people in the UK.  So the finger pointing at Davos was, at best mischievous.  Like it or not these people have the skills that create successful businesses. And jobs.

Charities like Oxfam have to be careful.  They have a good story to tell.  But they spoil it by sensationalising.  And that not only undermines the credibility of the charity, it also damages the people we seek to serve, the poorest in the world.

The Apple of your eye? Think twice before you buy.

Apple.  In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn.   Debt?  Sorry, a business with such level of income and profit, and a large amount in the company piggy bank, debt? Why?

Well, it’s really a very simple answer.  They don’t like paying tax and will do all they can not to pay tax.  Apparently 89% of it lies offshore out of the hands of the Internal Revenue Service.

So they could bring it back.  But won't because they don’t want to pay tax unlike like everyone else and every other business has to do.  So they are stuck by their own greed using complex structures including debt to avoid it.  How weird is that?  Think what you could do with that cash. You could wipe out poor water quality in developing countries.  

So next time you are looking for a new device, remember Apple don’t want to be like you, a responsible citizen who pays tax. Now, make your choice.

Alternatives to consider when you vote

A free market economy promises equality of opportunity, and a planned socialist economy promotes equality of outcome.  Which is best for the UK?  Discuss.

What a tangled web we weave....

Did you hear what Ed Miliband had to say about electricity and gas bills a while ago?  It’s pretty clear.  No room for wiggle.  A straight talking politician telling you exactly what they are going to do. Here are his words.  Exactly.  “The next Labour government will freeze gas and electricity prices until the start of 2017.”  That's what he told you and I the voters. And then backed it up with an advert. 

But wait a minute, what’s this in the small print that he didn’t tell the voters.  Labour spin-doctors wish to point out that they said in September 2013 that they would set up a body with “the power and remit to force energy companies to cut their prices when there is evidence of overcharging, for example when wholesale costs fall and the market fails to respond.”  Er, what?

The same note also stated: “we will put a stop to unfair price rises by freezing energy bills up to January 2017 for people coping with a cost of living crisis.”  Got that?  But that’s not the same thing as what Ed said.

So what Ed said to the voters and what Ed's spin team are putting out as small print on the story are rather different.

When the Labour party tweeted today "It’s pretty simple. When energy prices go down, your energy bills should go down too." they showed the Labour Party is complete ignorance as to how the energy markets actually work. Worrying for a party that aspires to government.

But that’s a story for another day.

What is wrong with the NHS in Scotland?

A friend of mine who was an anesthetist in NHS Scotland once lamented at the waste in the system.  £30m a year out of your, the taxpayers, pocket for example, went straight down the drain when people, amazingly, didn’t turn up for operations.  Of course there are cases when at the last minute a person can’t come.  For example, if they have caught a cold.  But they were in the tiny minority. 

And GPs experience the same sort of thing.  People not turning up for appointments.  You would be staggered if you knew how common this was. And the cost?  As a taxpayer it is costing you £16m every single year in Scotland. If you were ill enough to want to see a doctor, why on earth would you just not turn up?  And by not turning up in both cases you have cost the rest of us taxpayers money and you have deprived someone else of an appointment they desperately wanted.

So that's us just saved £46m a year.

Then when I pop into my local hospital for a regular check-up I’m met by a clerk who asks my name, then asks me to go to sit down and wait.  Past another person who is sitting waiting to call out patients when their time has come.  Why are two people doing a job that could be done by one person?  You can see where this is going. We are wasting money that should be going into patient care.

The real problem with the NHS is that it is a monolithic throw back to days when it was thought the State had to be cradle to the grave in its provision.  These days have long gone in most peoples minds.  But not in the minds of those who benefit most from a monopolistic health service.  I’m not referring to the nurses and doctors and porters and clerical staff as being the ones to blame.  No, the real problem lies in the place where change and reform are dirty words.  The Unions who are bankrolled by the millions of NHS staff and the Government who, no matter the political colour, are scared to do anything significant to reform the NHS.  No competition means no innovation.  No innovation means things never change.

Everyone wants a better NHS.  But we will never get what we wish for if we keep living in the past.  The NHS should be a concept, a vision, an ideology.  Not a monopolistic delivery service.   We have made it an institution with none of the disciplines and tools that would allow it to become what we all want it to be.  The best in the world.

Oil and taxation

So the price of Brent Crude goes down.  And every one is saying this is terrible.  Except when you go to the petrol pump and discover that petrol is now 20% less that it was a month ago.  So is the drop in the price of Brent Crude good or bad?  Well, it depends where you stand. 

For you and I it means we have more money in our pockets to spend as we see fit.  Which ultimately creates jobs in the productive private sector.

For the Government, it means less tax revenue.  Or does it? Despite George Osborne’s best efforts, petrol retailing remains a joint venture between the taxman and the private sector, with the latter merely a minority shareholder.  As a result, one ought to expect only a small proportion of any fall in the price of oil to filter through to the cost of petrol.

To illustrate what happens, let’s go back to when the price of a litre of petrol was around £1.33 – in other words, before the prices fell.  At the time, duty accounted for 58p, VAT for 22p, the companies that supplied the crude and refined it got 48p and the distributors (the petrol stations and trucks) got just 5p.  Since then, the price of petrol has dropped by 9p, almost all of which has been absorbed by the private sector and very little (bar a dip in VAT) by the Treasury.

The Treasury is still collecting 58p from duty, its take from VAT has dropped slightly to just under 21p, the oil companies get just over 40p (which means that their revenues are down by around 17pc) and the retailers still make as little as 5p.  Needless to say, none of these figures include the massive tax that the Government grabs on oil companies’ profits.

So what does this mean?  Well it means on current pump prices, tax accounts for 63.4pc of the money handed over by you at the petrol station.  This is a ludicrously high percentage.  Can you imagine that level of tax on any other product that you buy?  Yet it is the politicians who are taking the moral high ground, and pinning the blame for high prices on the private sector.   

The stark reality is that even if there were collusion of some sort – a point entirely unproved – the worst case scenario probably would be that prices are 1p-2p too high some of the time, a trivial problem compared with 79p “overpricing” caused by taxes.

Counting the days

I suspect there is an election on the way any time soon.  Sounds like it from the crawling to the TV and radio studies of the leaders of the main parties.  In England there is a pretty straight forward choice.  Vote UKIP, get Labour.

North of the border we have a different set of parties.  But the results may be similar in the sense that how you cast your vote will not so much decide whether the party you voted for gets into power at Westminster but some other party.  So with the SNP and Labour in Scotland virtually walking up the aisle together already it looks like a similar outcome north of the border.  Vote SNP, get Labour.

Now I happen to believe the SNP government in Scotland are a pretty competent bunch.  Indeed, I would vote for an SNP member of the Westminster parliament to ensure that the voice of Scotland is heard.  However, if it meant that it would bring Labour back to power in Westminster after they virtually bankrupted our country last time they were in power my vote will be going elsewhere.  Love or loath them, the Conservatives have tried, with varying degrees of success it has to be said, to bring some economic reality to the economy.  And it’s to the economy I will return in other posts.  But think of this before you go and make a cup of coffee.  The government has no money.  It only has ours, taxes from money earned by us.  

So, who is better at deciding how our money should be spent?  A government ?  Or us?  Discuss.